Get Properties at a Small Price

Some homeowners are not able to pay their property taxes in these difficult economic times.  That is the sad truth.  Your county depends on this source of revenue to pay for the maintenance of roads and highways, schools, parks, hospitals, law enforcement, fire departments, and other public services.  This means that if these tax debts are not paid, the county is going to take action in order to recover lost revenues.

They would place a lien on the tax delinquent property and if the debt remains unpaid, the property would be sold off worth thousands for the tax due amount.  With this golden opportunity, investors can purchase a property at a small price with tax liens and deeds investing.

Quick Summary of California Tax Deeds

California tax deeds sales use premium bidding method. The minimum bid amount set for investors to participate is equal to the tax amount, interest, penalties, and fees due. Most counties in the US only conduct an auction once a year. However, some conduct more than one auction per year.

Generally, property owners in California have up to the day before the auction to redeem their properties or lose them forever. Investors who participate in California tax deeds sales are recommended to check the list of properties before the auction. This may include contacting the county tax collector for information or checking the county’s website.

Tax deed sales are quite different in California. The redemption period in this state begins when the property becomes tax defaulted on July 1st on any given year, and ends after a tax deed sale five years later. Once the property is sold at a public auction, it may not be redeemed. In simple words, there is no extended right of redemption in California.

Avoid These Before Bidding in a Property

There are some things that you need to avoid before a tax sale happens.  Avoid getting your heart set on one specific property weeks before the sale.  Inventory of properties put up for auction, can change from time to time because some homeowners are able to pay their back taxes right on schedule.  Always check the status of the properties included in the inventory on a regular basis.  Do this in order not to waste time going in the auction, only to find out that none of the houses you like are available for bid.

Though it is not usually the case, it’s possible for tax liens to be held over the property on top of the tax deed.  If a lien does exist and is upheld legally after you’ve won the auction, you would lose the opportunity of full ownership.  This makes it hard for you to foreclose and make some profits.

You also need to avoid IRS tax liens.  It is because if a property has this type of lien, there’s a slim chance of getting the property you’re interested.  Don’t burden yourself with this problem.  Be responsible and do your research ahead of time.

Tax Deed Auction Methods

When you go to a tax deed auction, bidding would be conducted in three ways: live auction, absentee bidding, and hybrid. Each method is explained below:

Live Auction
You need to be present at a live auction and register in order to bid. When you attend a live auction, you’ll be able to have conversations with other bidders which may lead to good connections in the coming days. You also get to observe the prices other bidders are paying as well as their strategies.

Absentee Bidding
You submit your bids ahead of time with absentee bidding. The county works to get the property for the lowest amount possible, up to your maximum bid amount. You can submit your bids through the internet or email. The benefit you get from absentee bidding is that you need not to be around during the auction. Furthermore, you can submit your bids at your convenient time and the county does the works.

Hybrid Bidding
Live and absentee are joined together in hybrid bidding. You are given the opportunity to either attend the live auction or bid online, which also takes place simultaneously.

These three methods would give the profits you seek regardless on which one you’re going to choose. The crucial thing is that you must have proper research and due diligence before investing.

Tax Deed Auctions Competition Affect Prices

Just like any other business venture, too much competition at tax deed auctions would affect the prices of the properties closer to its market value. However, there are some aspects that prevent this situation from happening. Here they are:

a. Property Image
Some real estate investors think that properties which start at low bids are any good. Most of them avoid these auctions. These types of properties may not be situated in a downtown location but more in rural areas, in which some are quite nice properties. Some are raw or vacant land that can flip for more profits. This also means that you can acquire good deals from those auctions because of low competition.

b. Money Requirements
Tax deed auctions require money in order to place your bids. You can’t just come to an auction with $10 on hand and expect to purchase a $100,000 property. Remember that most counties have rules expecting winning bidders to come up with the full cash right after the sale. This is why some investors lack the fund to participate in the bids.

When there is less competition, you would be able to bid on the properties that are cheap yet good ones. Try exploring those rural areas and bring with you a decent amount of cash to get the properties you’re interested.

Repay Unpaid Mortgage from Tax Deed Auction?

There are several questions which are probably bothering you when it comes to investing in tax deed properties. One of these is important since it would help determine if you are indeed making profits. Is there a need to repay any unpaid mortgage on the property that I purchased from a tax deed auction?

Well, the simple answer to this question is NO, though you may want to check with the county where you purchased the property in order to be sure. To make it clear, the property you purchased at a tax deed auction would be free and clear on any mortgages and lien, once the redemption period is over. However, if there is no redemption period, then the title to the property would be cleared at the time of the tax deed auction.